<http://www.latimes.com/news/printedition/la-fg-argecon18feb18001440,1,1676421.story>
The Good Life Is No More for Argentina
The nation rode high on a free-market system, backed by the IMF and tied to the dollar. Then the global economy spun it into disaster.
By Hector Tobar
Times Staff Writer
February 18, 2003/L.A. TIMES
SAN ISIDRO, Argentina -- More than any other developing nation in the 1990s, Argentina embraced the free market and the global economy.
For top officials at the International Monetary Fund and economic gurus of the American right, Argentina was a star pupil. It sold off most government enterprises and loosened banking restrictions and controls on foreign investment. The IMF backed the strategy with billions of dollars in loans.
For a few years, people lived better than ever. Many Argentines believed that their country, already the most prosperous in Latin America, was finally graduating into the First World.
Then, in December 2001, the bottom fell out, causing a run on the banks that wiped out billions of dollars in deposits.
Nearly six months later, on a May morning that happened to be her 59th birthday, Norma Albino stepped into her bank branch in this Buenos Aires suburb of cobblestone streets, famous for its affluence and the tall spires of its 100-year-old church. She asked -- for the third or fourth time since December -- for her family's money. When the teller told her that he couldn't help her, she blurted out: "I'm going to kill myself."
As horrified bank employees looked on, she poured a bottle of rubbing alcohol over her head and snapped at a cigarette lighter.
Albino became, at that instant, a symbol of the rage and hurt smoldering inside millions of Argentines. Rushed to a hospital, she survived with third-degree burns. Months later, she has found that the best therapy is simply to forget.
"The politicians robbed us," she said. "But I don't care anymore. I try not to think about it."
Argentina's official unemployment rate stands at 22%, about the same as in the United States during the Great Depression. Poverty afflicts 53% of Argentines, triple the rate of just five years ago.
"We're not the poorest country. There are places that are much worse off," said Raul Queimalinos, an unemployed economist and writer. "What's hard for us is that we've known something better. We've lived well."
How Argentina came to suffer such a fall is an emblematic tale of the global economy's power to spur sudden prosperity in developing countries, and then, even more swiftly, to bring disaster.
It is never easy to apply the formulas of free markets to struggling countries, each with its own mix of politics and economic vulnerabilities. Some of the best candidates fail. In Argentina, corruption, political wrangling and a baroque system of public spending meant that reforms demanded by the IMF were never fully implemented. Over the course of a boom-and-bust decade, about $17 billion in IMF loans went largely to waste.
Several economists -- including Nobel Memorial Prize winner Joseph Stiglitz -- believe that the IMF based its policies on unrealistic expectations of Argentina's ability to reform and that it knew trouble was coming. Still, for a decade, the IMF endorsed Argentina's economic policies, giving a seal of approval that built confidence in its institutions.
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Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
